USD/JPY has tumbled to 156.04, but JPMorgan’s 164 year-end target survives because the pair remains inside its 155-165 central range.
The US Dollar to Japanese Yen (USD/JPY) exchange rate has slumped to around 156.04 after a sudden Yen surge wiped more than four Yen from the pair in less than 48 hours.
The latest USD/JPY rate was down 1.81% on the day and 2.56% across 48 hours, trading only fractionally above the period’s 156.00 low.
USD/JPY 48-Hour Price Chart
The fall looks severe on the short-term chart, but USD/JPY has not yet broken the range behind JPMorgan’s year-end forecast.
JPMorgan expects the BoJ to raise rates roughly once per quarter, while assuming no substantial change in market expectations for Federal Reserve policy.
“If the BOJ continues to hike at roughly a quarterly pace while Fed hike expectations do not change materially, we think USD/JPY is likely to remain within the 155–165 range for the time being. This is our base case, and we maintain our USD/JPY targets of 160 at end-September and 164 at end-December.”
At 156.04, USD/JPY is 1.04 Yen above the bottom of that range, while reaching 160 and 164 would require rebounds of approximately 2.5% and 5.1%, respectively.
JPMorgan said the OIS-implied probability of a September BoJ increase had already risen from 28% before the end-July intervention to 92%.
The latest surge therefore brings the market closer to the policy assumptions behind its central scenario rather than directly invalidating the 164 target.
USD/JPY Three-Month Chart
The three-month chart places USD/JPY much closer to its 155.27 low than July’s 163.98 peak, with the pair also trading below its 20-day and 50-day moving averages.
Fed Pause Scenario Points to 157
JPMorgan’s alternative scenario, in which the Fed pauses its rate increases, produces a lower USD/JPY range of 153-163.
“Based on the correlation between the 1y1y spread and USD/JPY observed at that time, the fair value of USD/JPY under a Fed pause scenario is around 157.”
The current rate is already slightly below that estimate, although it remains inside the scenario range and near the 156-160 band discussed in our earlier Japanese Yen forecast.
JPMorgan accepts that an overshoot could temporarily push USD/JPY below 155, but adds: “In this scenario, however, we view the likelihood of a sharp yen appreciation—such as a move below 150—as low.”
Near-Term US$/JPY Forecast: What Would Break the Range?
A sustained move below 155 would require a stronger catalyst, with JPMorgan identifying Fed rate-cut expectations, an accelerated BoJ cycle that damages Japanese equities, a GPIF portfolio change or heavier official Yen buying.
Slower-than-priced BoJ tightening, stronger Fed hike expectations or renewed Japanese fiscal concerns could instead drive USD/JPY above 165.
US payrolls and the September Fed and BoJ decisions will now determine whether 156 becomes the starting point for a rebound or the first step towards JPMorgan’s lower 153 boundary.
Our currency coverage draws on live market data, official economic releases and published bank research.
